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USD/CAD breaks out

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USD/CAD breaks out

The US dollar surged against its northern counterpart Wednesday, hitting a four-day high on the heels of weaker than forecast Canadian data.

The USDCAD pair soared to a session high of 1.1056 in North America, after several days of subdued trade kept the pair below the 1.10 handle. As of 17:00 GMT, the USDCAD was trading at 1.1044,, a gain of 90 pips. The trend index is moderately bullish after the pair broke three resistances (1.0965, 1.0993 and 1.1020).

Disappointing Canadian wholesale sales reignited concern over the country’s troubled economic outlook. Wholesale sales declined 1.4 percent to $49.6 billion in December, Statistics Canada reported today. This represented the lowest level in six months, as five of the seven wholesale subsectors reported declines. Sales volumes, which are used to calculate total output growth, contracted 1.6 percent. The numbers suggest Canada could be hard pressed to register meaningful GDP growth in December after five consecutive months of output growth.

Statistics Canada reports on consumer price inflation and retail sales Friday.

Concerns over Canada’s economic outlook outweighed broad declines in the US housing sector. US housing starts fell 16 percent to a seasonally adjusted annual rate of 880,000 in January, far below estimates. Permits for building projects, meanwhile, tumbled 5.4 percent to 937,000.

In a separate report, the Labor Department said producer prices rose 0.2 percent in January, exceeding forecasts. Annually, producer price inflation was up 1.2 percent. The Labor Department reports on consumer inflation tomorrow.

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